Complimentary White Paper

Understand the cause and risk of unauthorized subcontracting and how to mitigate the problem.

This White Paper will give you insights about:

The risks posed by unauthorized subcontracting in the consumer goods industry

Why suppliers resort to unauthorized subcontracting

Best practices to achieve greater transparency and continuous improvement in your supply chain

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Unauthorized Subcontracting: the Plague of Global Sourcing

Despite the progress in sustainable sourcing made by major brands and retailers in the past decade, the consumer goods industry is still rife with cases of unauthorized subcontracting, where the contracted manufacturer outsources parts of, or even whole orders, from a factory that isn’t formally a part of the buyer’s supply chain. Such facilities are often informal, unregistered, and with working conditions ranging from substandard to unsafe, abusive, and illegal.

In addition to causing obvious harm to the workers, unauthorized subcontracting can be a very painful issue for the buyers. On one hand, it creates the image of a brand that fails to scrutinize its supply chain; on the other, a business a company that cannot ensure that its products are actually produced in the approved factories is essentially throwing away its CSR budget.

The reasons behind unauthorized subcontracting

While unauthorized subcontracting is a global problem, and each country affected by it has a unique set of circumstances, from China’s labor shortages to Turkey’s host of refugees, a number of factors notably contribute to the problem:

Tight shipping deadlines and high penalties for delays

Intentional overbooking as a standard business practice

Cost saving

Changing buyer demands

Macro factors, including government policies and positive/negative incentives for certain industries